Germany Moves Closer to Accepting Military Role


Tobias Schwarz/Reuters


Germans with a Patriot missile battery. Germany has voted to send two Patriot missile batteries and 400 soldiers to Turkey.







BERLIN — When Chancellor Angela Merkel hosted a recent reception for military families, she greeted parents, wives and children whose loved ones were spending their holidays in Afghanistan, Lebanon, Kosovo and off the Horn of Africa. German deployments overseas, Ms. Merkel said, “will soon encompass the entire globe.”




On that same wintry afternoon, members of Parliament debated whether to add to the nearly 6,000 German troops currently serving abroad by sending up to 400 soldiers to Turkey, where they would operate two Patriot missile batteries to help protect their NATO ally from a potential escalation of the civil war across the border in Syria.


“For decades, we Germans have benefited from the fact that our partners gave us the feeling of reliable security,” Thomas de Maizière, Germany’s defense minister, said during the debate last month. “Now we are in a position and have the duty, even, to make our impact felt.”


Only a handful of shivering protesters passed out fliers in front of the Brandenburg Gate opposing the deployment. The vote easily passed in the Parliament two days later.


It was not that long ago that every German military action brought with it mass demonstrations, public hand-wringing and probing questions about the country’s militarist past. But the shadow of history continues to recede here and Germany is, for better or worse, quietly approaching a normal relationship with its armed forces.


For the past three years, Europe has been preoccupied with economic issues as the debt crisis threatened to sunder the euro currency union. But strategic military questions cannot be ignored indefinitely. The United States is increasingly shifting its focus to the Asia-Pacific region and reducing the number of troops stationed in Europe.


“Europe has more responsibility for its own security, and Germany has to step up to that, particularly considering its new economic power in Europe,” said Constanze Stelzenmüller, senior fellow at the German Marshall Fund in Berlin.


Conscription was suspended indefinitely here in 2011 as part of a drive to professionalize and modernize the armed forces. In August, the Constitutional Court ruled for the first time that the German military could be deployed at home under exceptional circumstances, like in the wake of a terrorist attack.


“Naturally, a great deal has developed further in terms of the acceptance of deployments outside of this country and outside the NATO territory,” said Col. Ulrich Kirsch, chairman of the German Federal Armed Forces Association, which represents the interests of active and former military personnel. “But the Germans are, now as before, difficult to inspire for military operations.”


Military business is another matter. Germany is the world’s third-biggest arms exporter, behind only the United States and Russia, sending weapons not only to NATO members and allies like Israel but increasingly to the Middle East and beyond. As the business grows, critics at home question sales to undemocratic countries like Saudi Arabia.


Germany’s military industry employs an estimated 80,000 people, jobs Ms. Merkel wants to protect, especially less than a year before September’s parliamentary election. In October, German opposition helped doom the proposed merger of two aerospace giants, British-based BAE Systems and the consortium EADS, in part out of concern that German jobs and influence might be lost in the new entity.


Last month Der Spiegel, the influential newsmagazine, showed a grim-faced Ms. Merkel on the cover in a camouflage suit jacket with the headline “German Weapons for the World.” The magazine described the Merkel doctrine as deploying fewer German troops to conflict zones and instead strengthening partners by selling them arms. The German government approved military exports in excess of 10 billion euros, or over $13 billion, for the first time in 2011, the magazine reported.


That is an especially impressive feat considering that military expenditures in Western and Central Europe fell 1.9 percent in real terms that year, according to the Stockholm International Peace Research Institute. Those cuts have “prompted unease in many quarters that European countries risk losing global influence as they fall further behind the United States in military capabilities,” the institute said in its most recent annual report on military spending, “while rising powers such as China rapidly catch up and even overtake them.”


Germany’s path forward could well determine the shape of Europe’s military affairs for years to come. Whether that is through a growing leadership role and the assumption of more responsibility for regional security or a limited, some say cynical, emphasis on protecting its own interests still remains to be seen.


“Germany is back in the game as one of the most important countries in the Western Hemisphere, but the kind of responsibility that goes with that is not really reflected in German government behavior,” said Olaf Böhnke, head of the Berlin office of the European Council on Foreign Relations. “If Germany wants to be in a leadership position, you need stronger military engagement.”


German troops have been in Afghanistan for more than a decade, but mostly restricted to the safer northern part of the country. The Bundeswehr, Germany’s army, sent its first Tiger attack helicopters to Afghanistan in December. On Tuesday the army announced that it had not suffered a single fatality in 2012 in Afghanistan.


Chris Cottrell and Victor Homola contributed reporting.



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Monti, in Twitter Q&A, says new voting law priority for Italy






ROME (Reuters) – Outgoing Italian Prime Minister Mario Monti said on Saturday if he wins February’s parliamentary election one of his first acts would be to overhaul the voting law to improve democracy and government stability.


Monti, 69, who last week confirmed he would lead a centrist coalition in the February 24-25 vote, called himself a “bit of a pioneer” in politics during nearly 2 hours of #MontiLive tweets.






The electoral law is unpopular because party leaders select candidates and voters cannot choose their representatives. For technical reasons, it also makes forming a stable majority more difficult, leading to broad and unwieldy coalitions.


“This electoral law is not worthy of a country like Italy,” said Monti of the 2005 legislation passed when centre-right rival Silvio Berlusconi was in power.


Monti and Berlusconi trail the centre-left in opinion polls and have made multiple appearances, mainly on TV, over the past week as they seek to recoup support and motivate voters who have said they do not intend to vote.


A poll by the Tecne research institute released on SkyTG24 on Friday showed Monti’s grouping would likely attract slightly more than 12 percent of the vote.


That compared with 40 percent for the centre-left bloc led by Pier Luigi Bersani’s Democratic Party (PD); and 25 percent for the most likely centre-right coalition of Berlusconi’s People of Freedom (PDL) and the Northern League.


In a separate tweet, Monti indicated he would “dialogue” with anyone after the vote whether he wins or not, as long as they are “reformists”.


BERLUSCONI BROADSIDE


Speaking at the same time in a live interview on the website of Corriere della Sera newspaper, Berlusconi said he would never again ally himself with Monti even though he offered him the leadership of the centre-right just a few weeks ago.


“All Italian citizens, in one way or another, are suffering” as a result of Monti’s 13 months in power, said Berlusconi, who says austerity has led the country into a recessionary spiral.


Monti took over in November 2011 when Italy was scrambling to avert a financial crisis and after Berlusconi, besieged by a sex scandal involving an underage prostitute, stepped down.


Berlusconi repeated on Saturday that his resignation was the result of an international plot to oust him and denied having made mistakes during his more than nine years in power.


“My only error is that I have not been able to explain what I have done for the country,” Berlusconi said.


“By now (Monti’s) image has become that of a person with whom I could not possibly collaborate,” Berlusconi said, calling the prime minister’s new alliance with two of Berlusconi’s former allies a “triple disaster”.


Berlusconi said a renewed accord with the Northern League may be finalized on Sunday. The Northern League has said the 76-year-old billionaire must not be the bloc’s prime ministerial candidate for a sixth time.


“Monti is an enemy of the north, and stopping him from returning to government is a categorical priority for us. Who is against Monti is an ally of the League,” Northern League leader Roberto Maroni tweeted on Saturday.


(Editing by Janet Lawrence)


Internet News Headlines – Yahoo! News





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Courteney Cox: I'll 'Show My Boobs' on the New Season of Cougar Town















01/04/2013 at 08:00 PM EST



Courteney Cox is taking the term "boob tube" literally.

The Cougar Town star, 48, whose show moves from ABC to TBS on Jan. 8, eagerly anticipates more um, revealing scenes once the program makes its way to the cable network.

"You will not see one scene that I don't show my boobs," Cox joked to reporters Friday at the Television Critics Association winter tour, according to Access Hollywood.

"You know what? I'm getting older, so I've decided at this point I'm taking less focus [on] the face, and focusing here," she added, pointing to her chest. "By the time I'm much older, I will just be absolutely nude. I think it's [going to] work for me, I hope."

The show's executive producer, Bill Lawrence, backed up Cox's comments. "There is one difference [with the show going to cable]," he said Friday. "I think I'm allowed to say … Courteney did declare this the year of her cleavage."

Still, the star isn't exactly baring it all. Although there is an episode themed "naked day" for Cox's character Jules and her on-camera hubby Grayson (Josh Hopkins), there will be no actual nudity on the show.

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FDA proposes sweeping new food safety rules


WASHINGTON (AP) — The Food and Drug Administration on Friday proposed the most sweeping food safety rules in decades, requiring farmers and food companies to be more vigilant in the wake of deadly outbreaks in peanuts, cantaloupe and leafy greens.


The long-overdue regulations could cost businesses close to half a billion dollars a year to implement, but are expected to reduce the estimated 3,000 deaths a year from foodborne illness. Just since last summer, outbreaks of listeria in cheese and salmonella in peanut butter, mangoes and cantaloupe have been linked to more than 400 illnesses and as many as seven deaths, according to the federal Centers for Disease Control and Prevention. The actual number of those sickened is likely much higher.


The FDA's proposed rules would require farmers to take new precautions against contamination, to include making sure workers' hands are washed, irrigation water is clean, and that animals stay out of fields. Food manufacturers will have to submit food safety plans to the government to show they are keeping their operations clean.


Many responsible food companies and farmers are already following the steps that the FDA would now require them to take. But officials say the requirements could have saved lives and prevented illnesses in several of the large-scale outbreaks that have hit the country in recent years.


In a 2011 outbreak of listeria in cantaloupe that claimed 33 lives, for example, FDA inspectors found pools of dirty water on the floor and old, dirty processing equipment at Jensen Farms in Colorado where the cantaloupes were grown. In a peanut butter outbreak this year linked to 42 salmonella illnesses, inspectors found samples of salmonella throughout Sunland Inc.'s peanut processing plant in New Mexico and multiple obvious safety problems, such as birds flying over uncovered trailers of peanuts and employees not washing their hands.


Under the new rules, companies would have to lay out plans for preventing those sorts of problems, monitor their own progress and explain to the FDA how they would correct them.


"The rules go very directly to preventing the types of outbreaks we have seen," said Michael Taylor, FDA's deputy commissioner for foods.


The FDA estimates the new rules could prevent almost 2 million illnesses annually, but it could be several years before the rules are actually preventing outbreaks. Taylor said it could take the agency another year to craft the rules after a four-month comment period, and farms would have at least two years to comply — meaning the farm rules are at least three years away from taking effect. Smaller farms would have even longer to comply.


The new rules, which come exactly two years to the day President Barack Obama's signed food safety legislation passed by Congress, were already delayed. The 2011 law required the agency to propose a first installment of the rules a year ago, but the Obama administration held them until after the election. Food safety advocates sued the administration to win their release.


The produce rule would mark the first time the FDA has had real authority to regulate food on farms. In an effort to stave off protests from farmers, the farm rules are tailored to apply only to certain fruits and vegetables that pose the greatest risk, like berries, melons, leafy greens and other foods that are usually eaten raw. A farm that produces green beans that will be canned and cooked, for example, would not be regulated.


Such flexibility, along with the growing realization that outbreaks are bad for business, has brought the produce industry and much of the rest of the food industry on board as Congress and FDA has worked to make food safer.


In a statement Friday, Pamela Bailey, president of the Grocery Manufacturers Association, which represents the country's biggest food companies, said the food safety law "can serve as a role model for what can be achieved when the private and public sectors work together to achieve a common goal."


The new rules could cost large farms $30,000 a year, according to the FDA. The agency did not break down the costs for individual processing plants, but said the rules could cost manufacturers up to $475 million annually.


FDA Commissioner Margaret Hamburg said the success of the rules will also depend on how much money Congress gives the chronically underfunded agency to put them in place. "Resources remain an ongoing concern," she said.


The farm and manufacturing rules are only one part of the food safety law. The bill also authorized more surprise inspections by the FDA and gave the agency additional powers to shut down food facilities. In addition, the law required stricter standards on imported foods. The agency said it will soon propose other overdue rules to ensure that importers verify overseas food is safe and to improve food safety audits overseas.


Food safety advocates frustrated over the last year as the rules stalled praised the proposed action.


"The new law should transform the FDA from an agency that tracks down outbreaks after the fact, to an agency focused on preventing food contamination in the first place," said Caroline Smith DeWaal of the Center for Science in the Public Interest.


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S&P 500 finishes at 5-year high on economic data

NEW YORK (Reuters) - The benchmark Standard & Poor's 500 index ended at a five-year high on Friday, lifted by reports showing employers kept up a steady pace of hiring workers and the vast services sector expanded at a brisk rate.


The gains on the S&P 500 pushed the index to its highest close since December 2007 and its biggest weekly gain since December 2011.


Most of the gains came early in the holiday-shortened week, including the largest one-day rise for the index in more than a year on Wednesday after politicians struck a deal to avert the "fiscal cliff."


The Dow Jones industrial average <.dji> gained 43.85 points, or 0.33 percent, to 13,435.21. The Standard & Poor's 500 Index <.spx> rose 7.10 points, or 0.49 percent, to 1,466.47. The Nasdaq Composite Index <.ixic> edged up 1.09 points, or 0.04 percent, to 3,101.66.


For the week, the S&P gained 4.6 percent, the Dow rose 3.8 percent and the Nasdaq jumped 4.8 percent to post their largest weekly percentage gains in more than a year.


The CBOE Volatility index <.vix>, a measure of investor anxiety, dropped for a fourth straight session, giving the index a weekly decline of nearly 40 percent, its biggest weekly fall ever. The close of 13.83 on the VIX marks its lowest level since August.


In Friday's economic reports, the Labor Department said non-farm payrolls grew by 155,000 jobs last month, slightly below November's level. Gains were distributed broadly throughout the economy, from manufacturing and construction to healthcare.


Also serving to boost equities was data from the Institute for Supply Management showing U.S. service sector activity expanding the most in 10 months.


With the S&P 500 index at a five-year closing high, analysts said any gains above the index's intraday high near 1,475 in September may be harder to come by.


"We are getting to a point where we need a strong catalyst, which could be earnings, it could be three months of good economic data, it could be a variety of things," said Adam Thurgood, managing director at HighTower Advisors in Las Vegas, Nevada.


"What is going on right now is this conflicting view of fundamentals look pretty good and improving, and then you've got these negative tail risks that could blow everything up," Thurgood said.


He referred to "a fiscal superstorm brewing" of issues still left unresolved in Washington, including tough federal budget cuts and the need to raise the government's debt ceiling all within a couple of months.


The rise in payrolls shown by the jobs data did not make a dent in the U.S. unemployment rate still at 7.8 percent.


A Reuters poll on Friday of economists at Wall Street's top financial institutions showed that most expect the Fed in 2013 to end the program with which it bought Treasury debt in an effort to stimulate the economy.


A drop in Apple Inc shares of 2.6 percent to $528.36 kept pressure on the Nasdaq.


Adding to concerns about Apple's ability to produce more innovative products, rival Samsung Electronics Co Ltd is expected to widen its lead over Apple in global smartphone sales this year with growth of 35 percent. Market researcher Strategy Analytics said Samsung had a broad product lineup.


Eli Lilly and Co was among the biggest boost's to the S&P, up 3.7 percent to $51.56 after the pharmaceuticals maker said it expects its 2013 earnings to increase to $3.75 to $3.90 per share, excluding items, from $3.30 to $3.40 per share in 2012.


Fellow drugmaker Johnson & Johnson rose 1.2 percent to $71.55 after Deutsche Bank upgraded the Dow component to a "Buy" from a "Hold" rating. The NYSEArca pharmaceutical index <.drg> climbed 0.6 percent.


Shares of Mosaic Co gained 3.3 percent to $58.62. Excluding items, the fertilizer producer's quarterly earnings beat analysts' expectations, according to Thomson Reuters I/B/E/S.


Volume was modest with about 6.07 billion shares traded on the New York Stock Exchange, NYSE MKT and Nasdaq, slightly below the 2012 daily average of 6.42 billion.


Advancing stocks outnumbered declining ones on the NYSE by 2,287 to 701, while on the Nasdaq, advancers beat decliners 1,599 to 866.


(Reporting by Chuck Mikolajczak; Editing by Nick Zieminski and Kenneth Barry)



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China Says Reporter for The Times Was Not Expelled





BEIJING — Responding for the first time publicly to the case of a reporter for The New York Times who was forced to leave mainland China, the country’s Foreign Ministry said on Friday that he had not been expelled but that his visa application had simply been filed incorrectly.




Speaking at the Foreign Ministry’s daily news briefing, Hua Chunying, a spokeswoman, said foreign news organizations were to blame for the departure on Monday of Chris Buckley, a 45-year-old Australian who had been a correspondent for Reuters until September, when he rejoined The Times.


Ms. Hua said the ministry had not been properly informed of his changed status.


“So far, we have neither received any notice of resignation (from Reuters), nor has the press card, which was issued by the information department (of the Foreign Ministry), been returned by Chris Buckley,” Ms. Hua said, according to the Xinhua news agency. “So, we do not know who his real boss is now.”


When Mr. Buckley’s visa, which had been issued while he worked for Reuters, ran out on Dec. 31, he and his family were forced to fly to Hong Kong, despite repeated requests from The Times for a new visa to be issued.


Ms. Hua said Mr. Buckley had not been expelled.


“There has been no such thing as a rejection of a visa extension, and there is no such thing as Chris being expelled,” Ms. Hua said, according to The Associated Press.


On a related matter, The Times is also waiting for the visa of its new Beijing bureau chief, Philip P. Pan, to be issued. Mr. Pan first requested a visa last March. The English- and Chinese-language Web sites of The Times have been blocked in China since October, when it published an investigative article about the finances of the family of China’s prime minister, Wen Jiabao.


This article has been revised to reflect the following correction:

Correction: January 4, 2013

An earlier version of this article misstated the job title of Philip P. Pan. He is the new Beijing bureau chief of The New York Times, not the China bureau chief.



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New Jersey man accused of trying to hire “cannibal cop” to kidnap woman






NEW YORK (Reuters) – A New Jersey man offered to pay $ 5,000 to the so-called “cannibal cop” to kidnap a woman and deliver her to be raped, U.S. officials alleged on Friday.


Federal authorities arrested Michael Vanhise, 23, and charged him with conspiracy to commit kidnapping with Gilberto Valle III, a New York police officer who was arrested in October and charged with conspiring to kidnap, torture, cook and eat women.






In a series of emails last year, Vanhise tried to bargain down the kidnapping fee and urged the police officer to “just make sure she doesn’t die before I get her,” according to a criminal complaint unsealed Friday.


“No need to worry,” Valle replied in an email, prosecutors allege. “She will be alive. It’s a short drive to you.”


Vanhise admitted to investigators he sent the emails, prosecutors said.


Valle, nicknamed the “cannibal cop” by New York media, was accused of targeting women whose names were discovered in a file on his computer.


In November, Valle pleaded not guilty and said he was merely engaged in online fantasy role play.


Vanhise was charged with one count of conspiracy to commit kidnapping. He was expected to appear in court Friday afternoon. His attorney, Alice Fontier, did not immediately return a call for comment.


The emails between the two men “read like a script from a bad horror film,” Manhattan federal prosecutor Preet Bharara said Friday in a statement.


Vanhise was also accused of emailing photos and the home address of a girl from his Hamilton, New Jersey neighborhood to two unnamed people, according to a criminal complaint, which said Vanhise solicited the girl’s kidnapping.


Prosecutors said Vanhise tried to bargain down the price for the kidnapping to $ 4,000.


“Could we do 4?” Vanhise asked Valle in an email last February, according to the complaint.


“I am putting my neck on the line here … $ 5,000 and you need to make sure that she is not found,” Valle responded. “She will definitely make news.”


Valle’s estranged wife tipped off authorities after she discovered a disturbing file on his computer, a law enforcement official said at the time.


The file, called “Abducting and Cooking: A Blueprint,” contained the names and pictures of at least 100 women, and the addresses and physical descriptions of some of them, according to court documents.


Authorities charged last fall that Valle had undertaken surveillance of some of the women at their places of employment and their homes.


Valle was denied bail by a judge who called the charges “profoundly disturbing.”


Both men face a maximum sentence of life in prison if convicted. The case has disturbed even veteran criminal investigators.


“No effort to characterize the defendant’s actions is necessary,” said FBI Assistant Director-in-Charge George Venizelos in a statement. “The factual allegations more than suffice to convey the depravity of the offense.”


(Reporting by Chris Francescani; Editing by Daniel Trotta and Alden Bentley)


Internet News Headlines – Yahoo! News




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George Lucas Engaged to Mellody Hobson















01/03/2013 at 07:35 PM EST







George Lucas and Mellody Hobson


Mike Coppola/Getty


George Lucas is following the Force – right down the aisle.

The Star Wars director, 68, is engaged to DreamWorks animation chairman Mellody Hobson, a rep for Lucasfilm confirmed to The Hollywood Reporter on Thursday.

Hobson, 43, has been dating Lucas since 2006. This will be her first marriage and Lucas's second; he previously was married to film editor Marcia Lou Griffin. The exes adopted a daughter Amanda before their 1983 divorce. Lucas went on to adopt two more children.

Lucas's fiancée is also a contributor to Good Morning America's financial segments and has received many honors, including a 2002 listing as one of Esquire's "Best and Brightest" in America.

Lucas has made headlines of his own, recently donating to an education foundation much of the $4 billion from his sale of Lucasfilm to Disney.

According to THR, Lucas said at the time, "As I start a new chapter in my life, it is gratifying that I have the opportunity to devote more time and resources to philanthropy."

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CDC: 1 in 24 admit nodding off while driving


NEW YORK (AP) — This could give you nightmares: 1 in 24 U.S. adults say they recently fell asleep while driving.


And health officials behind the study think the number is probably higher. That's because some people don't realize it when they nod off for a second or two behind the wheel.


"If I'm on the road, I'd be a little worried about the other drivers," said the study's lead author, Anne Wheaton of the Centers for Disease Control and Prevention.


In the CDC study released Thursday, about 4 percent of U.S. adults said they nodded off or fell asleep at least once while driving in the previous month. Some earlier studies reached a similar conclusion, but the CDC telephone survey of 147,000 adults was far larger. It was conducted in 19 states and the District of Columbia in 2009 and 2010.


CDC researchers found drowsy driving was more common in men, people ages 25 to 34, those who averaged less than six hours of sleep each night, and — for some unexplained reason — Texans.


Wheaton said it's possible the Texas survey sample included larger numbers of sleep-deprived young adults or apnea-suffering overweight people.


Most of the CDC findings are not surprising to those who study this problem.


"A lot of people are getting insufficient sleep," said Dr. Gregory Belenky, director of Washington State University's Sleep and Performance Research Center in Spokane.


The government estimates that about 3 percent of fatal traffic crashes involve drowsy drivers, but other estimates have put that number as high as 33 percent.


Warning signs of drowsy driving: Feeling very tired, not remembering the last mile or two, or drifting onto rumble strips on the side of the road. That signals a driver should get off the road and rest, Wheaton said.


Even a brief moment nodding off can be extremely dangerous, she noted. At 60 mph, a single second translates to speeding along for 88 feet — the length of two school buses.


To prevent drowsy driving, health officials recommend getting 7 to 9 hours of sleep each night, treating any sleep disorders and not drinking alcohol before getting behind the wheel.


__


Online:


CDC report: http://www.cdc.gov/mmwr


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Asian shares drop on Fed minutes, dollar extends gains

TOKYO (Reuters) - Asian shares fell on Friday, as investors booked profits from a recent sharp climb after senior Federal Reserve officials expressed concerns about continuing to expand stimulative bond buying, but the dollar extended gains as U.S. debt yields rose.


European shares were seen tracking Asian peers lower, with financial spreadbetters predicting London's FTSE 100 <.ftse>, Paris's CAC-40 <.fchi> and Frankfurt's DAX <.gdaxi> would open down as much as 0.3 percent. A 0.1 percent drop in U.S. stock futures suggested a soft Wall Street start. <.l><.eu><.n/>


Minutes from the Fed's December policy meeting released on Thursday showed concerns among some members of the Federal Open Markets Committee about the potential risks of the Fed's asset purchases on financial markets, even if it looked set to continue an open-ended stimulus program for now.


The Fed's asset-buying policy has been pivotal in underpinning investor risk appetite, so the more hawkish Fed minutes unnerved financial markets.


Benchmark U.S. Treasury yields continued their climb, hitting an eight-month high around 1.93 percent in Asia on Friday, while key 10-year Japanese government bond yields touched a 3-1/2-month high of 0.83 percent.


The dollar also rose on data showing U.S. private-sector hiring improved in December, raising hopes for a strong monthly payrolls report due later in the day, a key gauge to the U.S. economy and the Fed's future policy course.


The dollar's rise makes dollar-based assets more expensive for non-dollar investors, hitting precious metals and oil.


The Fed's minutes spurred consolidation from broad-based buying which took place after U.S. lawmakers earlier this week narrowly avoided falling off the "fiscal cliff" of automatic taxes rises and spending cuts, which risked derailing the economy.


"Market moves largely reflect positioning after the recent rallies and before the nonfarm payrolls, which could tip the markets either way," said Yuji Saito, director of foreign exchange at Credit Agricole in Tokyo, adding that markets may be dictated by interest rates this year, rather than risk-on, risk-off sentiment as was last year.


MSCI's broadest index of Asia-Pacific shares outside Japan <.miapj0000pus> slid 0.7 percent, after scaling its highest since August 2011 on Thursday. But the pan-Asian index was set to end the first week of 2013 up 1.8 percent, thanks to the New Year's rally.


"After the big relief rally we had on the fiscal cliff decision and compromise, I would expect the market to consolidate a little bit," Martin Lakos division director at Macquarie Private Wealth, said of Australian shares <.axjo> which slipped 0.4 percent, retreating from Thursday's 19-month highs. Hong Kong shares <.hsi> eased from a 19-month highs, falling 0.6 percent, but Shanghai <.ssec> rose 0.5 percent.


The dollar hit its highest since July 2010 against the yen at 87.835 while the euro fell to a three-week low of $1.3019. The U.S. dollar <.dxy> also touched a six-week high against a basket of major currencies on Friday.


"Dollar-positive momentum is solid as the fiscal cliff was averted, the overnight data was good and yields were rising. I won't be surprised to see the dollar rise to 90 yen soon," said Hiroshi Maeba, head of FX trading Japan for UBS in Tokyo.


"Despite repeated Japanese intervention, the dollar had refused to strengthen in the past, but now, it's advancing without any action, suggesting the direction has completely changed to support continued dollar buying," Maeba said.


The yen's tumble pushed Japan's benchmark Nikkei stock average <.n225> briefly up more than 3 percent to its highest since March 2011, outshining the Asian regional bourses. The Nikkei closed up 2.8 percent. <.t/>



ADP vs US gov't jobs data: http://link.reuters.com/fex44t


Global services activity: http://link.reuters.com/dyh85s


Video on fiscal cliff: http://link.reuters.com/zaf94t


SE Asia valuations: http://link.reuters.com/cuj64t


^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>


FISCAL CLIFF VS DATA


U.S. President Barack Obama and congressional Republicans face tough talks on spending cuts and an increase in the nation's debt limit as the hard-fought fiscal deal delayed decisions on expenditures until March 1.


Investor sentiment was supported by recent solid data from the world's two largest economies, the United States and China.


China's services sector saw its slowest rate of expansion in nearly a year and a half in December, a private sector survey showed on Friday, but underlying growth revival remained intact, even if it were modest.


"We are coming off overbought levels today. This cyclical-led rally in offshore Chinese shares should continue in the next few weeks, China's improving economic data will help," said Wang Ao-chao, UOB-Kay Hian's Shanghai-based head of China research.


The U.S. economy likely added 150,000 jobs in December, according to a Reuters survey, up from 146,000 in November. The unemployment rate is expected to hold steady at 7.7 percent.


Resolution of the U.S. fiscal cliff crisis could weigh on some Asian assets as investors could start to shift some money out of overpriced Asian investments in favor of the U.S. on brightening prospects for American stocks.


U.S. crude fell 0.7 percent to $92.26 a barrel while Brent shed 0.6 percent to $111.47.


Spot gold fell 1 percent to around $1,645, dragging silver down more than 2 percent to $29.48.


Despite the decline in equities markets, sentiment in Asian credit markets remained upbeat, with the spread on the iTraxx Asia ex-Japan investment-grade index narrowing by two basis points.


(Additional reporting by Maggie Lu Yueyang in Sydney and Clement Tan in Hong Kong; Editing by Eric Meijer)



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